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21st Century Holding Company (



Q3 2011 Earnings Conference Call

November 10, 2011 4:30 PM EST


Michael Braun – President and CEO

Pete Prygelski – CFO


William Meyers – Miller Asset Management

Douglas Ruth – Lennox Financial Services



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Good afternoon, and welcome to 21st Century Holding Company’s third quarter 2011 financial results conference call.

My name is Jonathan and I will be your operator today.

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Please note that today’s call is being recorded. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).

Please also note that statements in this conference call that are not historical facts are forward-looking statements without limiting the generality of the foregoing words such as may, will, expect, belief, anticipate, intend, could, would, estimate or continue or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. The matters discussed on this call that are forward-looking statements are based on current management expectation involve risks and uncertainties that may result in these expectations not to be realized.

Actual events, outcomes and results may differ materially from what is expressed or forecasted in forward-looking statements made on this call due to numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in this conference call or press release issued today and other filings made by the company with the SEC from time-to-time.

Forward-looking statements made during this presentation speaks only as of the date on which they are made, and 21st Century Holding Company specifically disclaims any obligation to update or revise any forward-looking statements to reflect new information, future events or circumstances, or otherwise.

Now at this time, I’d like to turn the conference call over to Michael Braun, Chief Executive Officer and President of 21st Century Holding Company. Please go ahead, sir.

Michael Braun

Good afternoon, and thank you for joining us to discuss 21st Century Holding Company’s third quarter 2011 financial results. I’m joined on the call by Pete Prygelski, our Chief Financial Officer.

Our full financial results for the quarter can be found in our earnings press release on our website.

I will go over some brief highlights from the quarter, and then Pete and I, will open up the line for questions.

You have heard us talking over the last two years about initiatives undertaken to improve our underwriting results and return to profitability. These include: enhanced analytical approach to underwriting all new business, reevaluating our existing policies, and managing our geographic diversity. At the same time, we also focused on maintaining tight control over our operating expenses and taking a more conservative approach to risk retention. We have been steadily building positive momentum in our quarterly results, and today we are pleased to announce a quarterly profit.

Highlights of the third quarter include: net income of $428,000 or $0.05 per share, compared with a net loss of $1.3 million or $0.16 per share a year-ago, and a net loss of $800,000 or $0.10 last quarter.

Significantly improved underwriting results; our core underwriting business continues to benefit from our more disciplined long-term approach to exposure management. We continue to write and renew more profitable business and remove non-profitable business from our book of business. Our loss ratio improved to 60.9% from 74.6% in the third quarter of 2010, a substantial improvement.

Accelerating flow through of rate increases to premiums; increases that we received earlier this year on both our voluntary and assumed books of business are being realized. The latest was a 13.9% increase on the homeowner policies that we assumed from Citizens Property Insurance Corporation in 2009. Continued flow through of those rate increases will have a growing positive effect on revenue going forward as we continue to write new business and renew our existing policies at the higher rates.

Continued reduction of our operating expenses; we saw a 9% reduction of operating and payroll expenses versus prior year and we continue to keep tight control over our operating expenses going forward.

We are pleased with our results this quarter and our efforts undertaken to get back to the core fundamentals of our business. The combination of our improved underwriting and reduction in operation expenses, position us well for 2012. We remain focused on creating a book of business that produces favorable underwriting results that can be sustained over the long-term to generate attractive returns for our shareholders.

With that, we are glad to open up the call for your questions.

Question-and-Answer Session


Certainly. (Operator Instructions). Our first question comes from the line of William Meyers from Miller Asset Management. Your question please.

William Meyers – Miller Asset Management

Yes. Hi. Congratulations on the profits in the quarter. I guess, despite that, my job is to be critical, and so my first question is, I see your – on your automobile line, you have a higher loss ratio than on the other lines, and I’m wondering whether the automotive business is a good business for you to be in? And any color you can give on that would be great.

Michael Braun

Yes. We do have a small book of auto premium. The majority of our business by far is homeowners, and homeowners is just performing very well. In terms of the auto, because it’s such as a small book, it’s subject to volatility as well, one claim can really kind of spike things one way or the other. But it’s a small book of business that we do not really see growing much in the near future.

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